EFFECT OF ENVIRONMENTAL REPORTING ON LIQUIDITY OF FIRMS IN NIGERIA

PDF

Published: 2022-04-06

Page: 636-646


OBIORA FABIAN *

Department of Accountancy, Chukwuemeka Odumegwu Ojukwu University, Igbariam, P.M.B. 002, Uli, Anambra State, Nigeria.

OMALIKO EMEKA

Department of Accountancy, Nnamdi Azikiwe University, P.M.B. 5025, Awka, Anambra State, Nigeria.

*Author to whom correspondence should be addressed.


Abstract

This study empirically examined the effect of environmental reporting on corporate liquidity in Nigeria. The study’s independent variables include employee health and safety disclosure, pollution control disclosure, and environmental remediation disclosure, which were used as proxies for the environmental reporting, while the dependent variable is company liquidity and was proxy as a current ratio. Three hypotheses were formulated for this study. An ex post facto design was used and the data for the study comes from the published annual financial reports of all 41 companies listed on the sectors of Nigerian Exchange Group ranging from Consumer Goods Sector, Oil & Gas Sector and Industrial Goods Sector, with the data covering the period of 2015-2021. However, the study found that employee health and safety disclosure, pollution control disclosure and environmental remediation disclosure have significant impact on companies’ liquidity proxy, as the current ratio at 1% significant level. On this basis, the study concludes that environmental reporting has positively improved companies’ liquidity over the years. In lieu of the study results, it was recommended that companies disclose more of this information in their annual reports, as the level of disclosure of environmental practices over the years has a significant impact on companies' liquidity.

Keywords: Employees health and safety disclosure, pollution control disclosure and environmental remediation disclosure, liquidity


How to Cite

FABIAN, O., & EMEKA, O. (2022). EFFECT OF ENVIRONMENTAL REPORTING ON LIQUIDITY OF FIRMS IN NIGERIA. Asian Journal of Advances in Research, 5(1), 636–646. Retrieved from https://jasianresearch.com/index.php/AJOAIR/article/view/382

Downloads

Download data is not yet available.

References

Odua, Ikeh. Effect of environmental accounting and firms performance, Journal of Financial Economies. 2017;2(3):45-52.

Philips C. Effect of environmental disclosures on liquidity of listed manufacturing firms in France, European Journal of Business and Management. 2016;2:14-23.

Smart T. Environmental disclosures and liquidity among Italian listed manufacturing firms in Italy, Journal of Science. 2015;2(3):5-12

Dang A, Knechel S. Pollution control disclosures and liquidity listed manufacturing firms in Germany, Journal of Scientific Research. 2016;4(8):6-12

Petrovits N. Effect of waste management disclosures on liquidity of manufacturing firms. Journal of Empirical Literature. 2014;6:5-12.

Nasir L, Omar T. Effect of environmental disclosures on liquidity of listed manufacturing firms in France, Journal of Empirical Literature. 2015;4(5):4-13.

Vogel T. Environmental disclosures and liquidity of manufacturing firms, Social and Basic Sciences Research Review. 2017;1(3):9-16.

Waddock S, Graves H. Effect of waste management disclosures on liquidity in Australia, Journal of Social and Basic Research Review. 2014;4(2):65-75.

Agbiogwu AA, Ihendinihu JU, Okeke MC. Impact of environmental and social costs on performance of Nigerian manufacturing companies. International Journal of Economics and Finance. 2016;8(9):173-180.

Dibua NO, Onwuchekwa JC. Environmental disclosures and corporate leverage: A case study of oil and gas companies. International Journal of Finance and Accounting. 2015; 4(3):145-152.

Ezejiofor RA, Racheal J, Chigbo BE. Effect of sustainability environmental cost accounting on financial performance of Nigerian corporate organizations. International Journal of Scientific Research and Management. 2016; 4(8):4536-4549.

Emeakponuzo DE, Udih M. Environmental accounting practices by corporate firms in emerging economies: Empirical evidence from Nigeria. Advances in Research. 2015;3(2):209-220.

Ifurueze MSK., Lydon ME, Bingilar PF. The impact of environmental cost on corporate performance: A study of oil companies in Niger Delta States of Nigeria. Journal of Business and Management. 2013; 2(2):1-10.

Ngwakwe C. Environmental responsibility and firm dividend payout: Evidence from Nigeria, World Academy of Science, Engineering and Technology. 2018;46:22-29.

Omaliko E, Okpala, N. Effect of environmental disclosures on dividend payout of firms in Nigeria. International Journal of Banking and Finance Research. 2020;6(3):14-28.

Dyllick M, Hockerts T. Environmental and social disclosure; theoretical review, International Journal of Scientific Management 2016;4(2):64-70.

Eze JC, Nweze AU, Enekwe CI. The effects of environmental accounting on a developing nation: Nigerian experience. European Journal of Accounting, Auditing and Finance Research. 2016;4(1):17-27.

Adedilan U, Alade M. Impact of Environmental Accounting on Corporate Performance in Germany, International Journal of Advanced Research. 2013;1:85-91.

Thompson T. The relationship between corporate financial performance and corporate social and environmental disclosure, Journal of Finance. 2017;2:34-39.

Omaliko, E, Okpala E. Impact of corporate diversification on sustainability of listed health care firms in Nigeria. Asian Journal of Economics, Business and Accountancy. 2022;22(4):59-69.

Freeman H. Stakeholders Theory; Theoretical perspective, New York: Harper and Row Inc; 1983.

Jensen K. Problems associated with agency theory with free cash flow, Journal of Financial Economies. 1986;7(6):34-36

Wumoo M. Impact of health and safety policies on performance of Ghanaian timber industry, Journal of Empirical Literature. 2013;2(3):44-56.

Lim A. OHS management system: Three benefits for construction enterprise. Journal of Empirical Literature. 2012;2(3):22-31.

Hudson C. Effect of health and safety promotion on performance of firms in Sudan, International Journal of Management. 2012; 3(4):34-42.

Klassen R, McLaughlin CP. The impact of environmental management on firm performance in Germany, Management Science. 2016;42(8):1199–1214.

Russo V, Fouts A. A resource-based perspective on corporate environmental performance and profitability. Academy of Management Journal. 2017;40(3):534–559.

Ameer KE, Othman M. An empirical examination of the relationship between environmental sustainability and profitability, Academy of Management Journal. 2012;28(2): 446-463.

Watson K. Impact of environmental management system implementation on financial performance: a comparison of two corporate strategies.’ Management of Environmental Quality: An International Journal. 2014;15(6):622–628.

Jaffe A. Environmental regulation and the competitiveness of Bombay manufacturing: What does the evidence tell us?. Journal of Economic Literature. 2015;33(1):132–163.

Omaliko E, Uzodimma A, Ogbuagu N. Comparative analysis of environmental disclosures in oil and gas industries in Nigeria: A study of selected oil and gas industries on the Nigerian stock exchange. World Educators Forum. 2018;10(1):1-13.

Omaliko E, Nwadialor E, Nweze, A. Effect of non-financial disclosures on performance of non-financial firms in Nigeria. Journal of Accounting and Financial Management. 2020;6(1):16-39.

Omaliko E, Nweze A, Nwadialor E. Effect of social and environmental disclosures on performance of non-financial firms in Nigeria. Journal of Accounting and Financial Management. 2020; 6(1):40-58.